Over the last five years, there’s been a huge shift in the way Arizona residents power their homes, with many, many households dumping the traditional electric grid setup for a solar panel connection. Propelled by massive state and local incentives, homeowners looking to go solar in this state stand to save hundreds or even thousands of dollars on a solar installation and in lifetime savings from energy generation with programs like the state’s net metering options.
With so many incentives available, it’s important to know the ins and outs of program details before you get going in order to really maximize your savings. Here’s an overview of residential solar in Arizona.
Arizona Solar Support
In Arizona, the usual tug-of-war between utilities and solar providers has devolved into an outright battle, as utilities recently lobbied for new legislation requiring solar lease providers to explicitly state the cost of paying off a solar system over time to residents interested in leasing equipment. Power purchasing agreements, as they are known, provide an alternative for residents who can’t afford to buy systems outright, but long pay-back terms and high percentages have legislators concerned. Meanwhile, installers like SolarCity see the new rules as an affront: they say it’s not necessary to regulate sales tactics.
This means that residents may find themselves caught in an ugly firefight between the two opposing sides, potentially causing shifts in amenities and legislation or even jeopardizing incentives. That’s not to say that Arizona has a history of opposition to solar incentives; on the contrary, there are a number of active programs aimed at encouraging residents to install photovoltaics in their homes.
The state also offers their support to solar adopters in another way: through the implementation of protections aimed at keeping residents safe. All solar systems must meet extensive manufacturing guidelines, and the contractors who install them must hold valid licenses to do so. Another requirement is warranties: all systems must be covered for at least two years, and the interior components for at least one. Arizona also successfully litigated for residential solar rights, meaning no local government or homeowner’s association can force you to remove panels or block their installation.
State Incentives in Arizona for Solar
If you live in Arizona and are thinking of going solar, you’re in luck. The state government has loaded current legislation with incentives and options for those looking to take advantage of alternative energy in their homes.
Sales Tax Exemption: New solar installations are eligible for a state sales tax exemption. With new systems averaging between $25,000 to $35,000 you can anticipate saving several hundred dollars in taxes through this incentive. Your system may still be charged citywide sales taxes, however.
Energy Equipment Property Tax Exemption: While there’s evidence that solar equipment adds value to homes, that can also mean higher property taxes–unless you live in Arizona. Here, residents are eligible for a property tax exemption equal to the increased value added by solar equipment. To qualify, contact your local tax assessor and provide them documentation of your new system, including the cost and the date it was installed.
Residential Solar Energy Credit: A one-time tax credit of up to $1,000 (or 25 percent of the cost of the system, whichever is lower) is offered to Arizona residents who choose to install solar panels and a variety of other solar energy devices in their homes. The credit even covers solar heating systems for swimming pools and hot tubs, which are not currently eligible for the federal government’s Residential Renewable Energy Tax Credit.
Net Metering: Arizona provides residents virtually unlimited net-metering–there is no set restriction on how much power a household can feed back into the grid, and that excess energy is then credited against use for savings on utility bills. However, there is a requirement that system be sized not to exceed 125 percent of a home’s energy needs. Net excess generated can be rolled over indefinitely on a single account, and is paid out when said account is closed. Additionally, as of this writing, the state has enacted a per-kW charge of 70 cents for installed systems feeding back to the grid, which usually works out to about a $5.00-a-month fee.
Renewable Energy Production Tax Credit: There is also a per kWh credit applied to solar panel owners for their first ten years of ownership. The amount varies depending upon the length of the installation; however, it is currently set at four cents per kWh for the first two years, a rate that eventually decreases to one cent after a decade of use.
Local Arizona Solar Incentives
Individual utilities and city governments throughout Arizona follow the state’s lead and provide numerous additional incentives and programs at a regional level. While the eligibility will depend on your location, a few notable programs are listed below:
- SunWatts Rebate Program – Duncan Valley Electric Cooperative: Members of the co-op receive a per-watt rebate of $1.00 a watt for new PV system installations, and 75 cents per kWh the first year after a solar heating system is installed.
- Renewable Energy Incentive Program – Mohave Electric Cooperative: Similar to Duncan Valley’s offerings, this program provides member with a 20-cent-per-watt rebate on solar energy systems, up to $3,000 total, and a 75-cent-per-kWh return for solar water heaters, for the first year of installation.
- SunWatts Rebate Program – Sulphur Springs Valley Electric Cooperative: Members of this co-op are also incentivized to install solar power by a 25-cent-per-watt return for solar panels, up to $2,500.
Installing Solar in Arizona
Arizona’s strict regulations for solar installation will have an effect on the installer you choose–and the way you go about initiating your project. All electricians operating in the state are required to complete a solar-specific training course in order to obtain a license to install. Meanwhile, homeowners and contractors setting up new systems are required to obtain a building permit from their local government before beginning the project.
Due to the popularity of solar in this area, there are many participating contractors you can tap to complete a project, including large national names. SolarCity, in particular, is very active in the area, and offers alternative programs like Power Purchase Agreements, which are an option for those who can’t afford to purchase a system outright.
Average Arizona Residential Electricity Use and Cost
With ACs blasting nearly year round, Arizona residents generally consume much more electricity than the average US household, a per capita use rate of 6,870 kWh annually, as opposed to the national average of 4,566 kWh. Meanwhile, The Grand Canyon State pays about average in electricity–11.1 cents per kWh compared to 12 cents nationally. Considering the high sun index for the state, residents who opt to install solar in their homes might see enormous benefits on their electricity spending just by generating a little bit of their own energy.
Solar Popularity in Arizona
That solar potential hasn’t been lost on Arizona residents–solar is exceedingly popular in the area. Industry estimates clock capacity at 2,303 megawatts, which is enough to power 327,000 homes.
Solar Productivity in Arizona
With long uninterrupted stretches of sunny days, rooftops in Arizona demonstrate extremely high potential for solar power. In fact, the National Renewable Energy Laboratory found that the state received some of the highest average solar radiation rates in the country–with a sun index level of 1.18, it ranks behind only Nevada in terms of solar potential.